PACRA Maintains Stability Rating of Alfalah GHP Mutual Funds

December 04, 2018 (MLN): PACRA maintains stability rating of Alfalah GHP Income Fund at ‘A+(f)’ for Long Term, with a stable outlook forecast

The rating reflects the good credit quality of the fund's portfolio. The portfolio depicts diversification across asset classes. Fund took ~76% exposure in cash with banks. The majority of exposure was with banks rated 'AA+' and 'AA-’. The remaining ~22% assets of the fund were invested with TFCs having credit ratings of 'A+' and above. %). The unit holding pattern of the fund is concentrated with top 10 investors representing ~91% of the fund's assets, (of which ~67% are owned investments) which exposes the fund to a low level of redemption pressure.

Going forward, the fund intends to enhance its exposure towards cash with banks – rated 'AA-' and above. The remaining net assets of the fund would be placed with good quality TFCs/Sukuks. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains critical for the rating.

PACRA maintains stability rating of Alfalah GHP Money Market Fund at ‘AA+(f)’ for Long Term, with a stable outlook forecast

The rating reflects the fund's strong credit quality and sound liquidity profile. At the end of Jun-18, the fund has ~100% exposure with banks as cash rated 'AA+' and above. On a monthly average basis, fund's exposure in Government securities remained above 50% in the last 6 months and duration remained below 60 days. Going forward, management intends to have a duration not exceeding 60 days. The unit holding pattern of the fund is concentrated with top 10 investors representing ~48% of the fund's assets which exposes the fund to a low level of redemption pressure.

Going forward, the rating remains dependent on maintaining the portfolio allocations towards government securities and banks with strong credit quality. Any material deviation from the investment philosophy will negatively impact the stability rating of the fund.

PACRA maintains stability rating of Alfalah GHP Sovereign Fund at ‘AA(f)’ for Long Term, with a stable outlook forecast

The rating reflects the fund's good credit profile emanating from its investment strategy to invest at least ~70% of the net assets in Government Securities transactions based on quarterly average investment. At the end of Jun-18, fund’s exposure in T-Bills was ~40%. The remaining assets were invested in TFC/Sukuks ~9% and cash balance ~50% with banks majorly having 'AA-' rating. The unit holding pattern of the fund represents a low level of redemption risk as top 10 investors concentration was ~43%.

Going forward, the management intends to maintain funds exposure towards good quality debt instruments, government securities and cash and term placements. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains critical for the rating.

PACRA maintains stability rating of Alfalah GHP Cash Fund at ‘AA+(f)’ for Long Term, with a stable outlook forecast

The rating reflects the change in the investment strategy to reduce the duration of the fund. During the year, the fund's exposure reflected strong credit profile emanating from its investment policy to invest in high credit quality instruments with portfolio duration not exceeding 45 days. At the end of Jun-18, the fund maintained ~99% exposure with banks. The duration remained less than 60 days in the past 6 months. The unit holding pattern of the fund is moderately diversified with top 10 investors representing ~95% of the fund's units of which ~68% is the group's own investments. 

Going forward, the rating remains dependent on maintaining exposure with high credit quality financial institutions with a portfolio duration of fewer than 60 days. Meanwhile, the remaining assets of the fund must be placed with the scheduled banks having strong credit quality.

PACRA maintains stability rating of Alfalah GHP Income Multiplier Fund at ‘A+(f)’ for Long Term, with a stable outlook forecast

The rating reflects the moderate credit quality and liquidity profile of the fund. At the end of Jun-18, fund's exposure was ~29% as cash with banks rated 'AA-' and above. The exposure with TFCs/Sukuks was ~68% with the minimum rating of 'A+' and above. The unit holding pattern of the fund is concentrated with top 10 investors representing ~75% of the fund's assets, (of which ~46% are owned investments) which exposes the fund to a low level of redemption pressure.

Going forward, the fund intends to maintain its exposure with the same investment avenues. The fund will invest in debt instruments having the credit rating not less than A-. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains critical for the rating.

PACRA maintains stability rating of Alfalah GHP Islamic Income Fund at ‘A+(f)’ for Long Term, with a stable outlook forecast

The rating reflects the fund's good credit quality and sound liquidity profile emanating from its ~65% exposure as cash with banks. The other ~25% assets of the fund were invested in good quality corporate sukuks having rating of 'A-' and above at the end of Jun-18. Meanwhile, the rating incorporates the fund's low exposure to interest rate volatility. The unit holding pattern of the fund is concentrated with top 10 investors representing ~88% of the fund's assets, (of which ~65% is the group's investments) which exposes the fund to a low level of redemption pressure.

Going forward, the management intends to maintain the current investment strategy. Material changes in the fund's asset allocation strategy, which could negatively impact the fund's credit quality and exposure to interest rate risk, remains critical for the rating.

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Posted on: 2018-12-04T15:24:00+05:00

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